Frerichs calls for more Wells Fargo oversight

Investors, including the state treasurers of Illinois and Connecticut, called on Wells Fargo to require an independent board chair, saying the bank needs stronger oversight in the wake of a scandal over fake customer accounts.

Although Wells Fargo already has shuffled its leadership structure, Connecticut Treasurer Denise Nappier on Tuesday said the investor group has filed a shareholder resolution for the San Francisco bank’s annual meeting next spring seeking a change in its bylaws.

Improvements need to be formalized, she said, because a board whose chair is also chief executive – the dual role once held by John Stumpf at Wells Fargo – creates a potential conflict of interest.

“At the end of the day, the company’s shameful conduct was fueled by poor governance that fostered a culture of irresponsibility and deficiencies in risk management,” Nappier said in a statement.

“Wells Fargo’s predatory and illegal banking practices have proved that the company needs a set of independent eyes to ensure stronger, unbiased oversight,” Illinois Treasurer Michael Frerichs said in a statement Tuesday.

“Recent revelations demonstrate Wells Fargo’s weak internal controls. When the CEO also serves as Board Chair, essentially as his own boss, there is simply a lack of accountability at the highest level of the organization.”

Via email, Wells Fargo spokesman Ancel Martinez said, “We appreciate the feedback that we receive from our investors and we will review the proposal.”

Stumpf resigned on Oct. 12, bowing to pressure following a $190 million settlement the bank reached with regulators in September. Reviews found the bank’s staff opened as many as 2 million accounts without customers’ knowledge to meet internal sales targets.

Stumpf was replaced as CEO by the bank’s president, Tim Sloan. The role of board chair was given to Stephen Sanger, who had been Wells Fargo’s lead director and was listed as independent in the bank’s latest proxy filing.

Nappier called the splitting of the roles “a welcome first step” but said Wells Fargo must still put a better leadership structure in place.

Co-filers of the resolution included shareholder adviser Hermes EOS and Needmor Fund, which had filed before Stumpf’s departure.

Frerichs had earlier cut some state business with Wells Fargo, such as suspending its use as a broker dealer and halting more than $30 billion in investment activity.